With the U.S. stock markets reaching new highs last week, investors are even more nervous about the impending correction that inevitably needs to take place. But when? When will we see investor sentiment, as well as institution sentiment, reverse from the current trend? There are a number of signs to watch for when a possible correction is on the way.

An early indicator for spotting a downward trend is when the number of 52-week highs begins to decline, despite growth in indexes. This indicates that fewer stocks are working to push the market higher. This may be a hint that investors are less optimistic in the market and a large correction could soon occur. This first signal is often present before a top is made.

High volume with declining stocks outnumbering advancing stocks is another possible signal that a correction is near. This is an indication that investors have decided to take their profits, showing that they are losing confidence in the markets to move higher. It is nearly impossible to time the top of the stock market. Many seasoned investors take their profits when they are comfortable that it is near.

Michael Hartnett, chief market strategist at Bank of America, believes an improving macro environment coupled with high cash levels and diminishing geopolitical threats will lead to an “irrational exuberance” run that will catch fire during the summer. He advised clients to buy during June rather than following the popular adage of “sell in May and go away.” This proved very lucrative.

After that, though, the danger comes. Hartnett sees upward pressure on interest rates in the 3rd or 4th quarter, with the market bracing for Federal Reserve action. “When the end of zero rates is threatened, likely Fall 2014, both credit and stock markets should correct sharply,” he said.

It was legendary investor, John Templeton, who said that “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.” All analysts believe that last week was a sure sign of euphoria.